Williams-Sonoma Swings to 3Q Loss, Suspends Share Buyback (WSM)

Tom Reese/Paul Rubillo, Dividend.com

Williams-Sonoma, Inc., a home-goods retailer, reported a third quarter loss of 10 cents per share on Thursday, hurt by lower consumer spending.

The San Francisco-based company, which operates Williams-Sonoma and Pottery Barn retail stores, posted a $10 million loss for the quarter, or 10 cents per share. This loss compares with a profit of $27.1 million, or 25 cents a share, a in the year-ago period.

Analysts had been expecting a quarterly loss of 11 cents per share.

Same-store sales, or sales in stores open at least one year, fell by 21.4% from the same period last year.

In a welcome bit of news, the company said it is discontinuing its $150 million share buyback program in order to conserve cash. Home retailers have been hit hard by the recent economic meltdown, which has spurred many cost-cutting measures throughout the sector.

The company reiterated its forecast for a profit of 10 cents to 30 cents a share for the fourth quarter, on revenue of $940 million to $1 billion, also saying it expects full-year earnings of 27 to 47 cents a share, slightly higher than the original October forecast of 25 cents to 47 cents.

The Bottom Line

We have been avoiding WSM shares since our early June coverage began, when shares were trading around the $22 level. Williams-Sonoma currently has a 6.26% dividend yield, based on last night's closing price of $7.67. We will continue to avoid most, if not all, home-related retail stocks until consumer spending shows signs of a rebound.

Williams-Sonoma, Inc. (WSM) is not recommended at this time, holding a Dividend.com Rating of 2.9 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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